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Music streaming services will finally eradicate piracy issues?

Back in 1999, global recorded music revenue was at $38 billion and it’s been falling ever since, mainly because of the so-called online music piracy phenomenon which is directly related to different kinds of copyright infringement. In a first moment, industry reaction to this problem has been a restrictive one. It lobbied governments to strengthen intellectual property protections without achieving any positive result, but filesharing continued on a mass scale and copyright enforcement appears ever more expensive and less effective, proving that the most useful thing to do is driving the ongoing change. However, a month ago, the NPD group released their “Annual Music Study 2012”, a report which shows that the number of music files being illegally downloaded was 26% less in 2012 than in 2011 and 40% of those surveyed admitted that they had illegally downloaded music in 2011, but claimed they had not done so in 2012. This is a really good reason to sing about, especially if we think that last year, however, digital sales and other new sources of revenue finally grew significantly enough to offset the continuing decline in CD sales. “Among other factors, the increased use of legal and licensed streaming services has proven to be an alternative for music fans who formerly used P2P networks to obtain music,” said NPD senior vice president Russ Crupnick in a press release. However, it’s too early to claim that streaming services will be the definitive solution to piracy issue, in particular because the underlying business model is not balanced and efficient yet, both for musicians and for streaming providers. In fact, Spotifiy, the most significant music streaming service at the moment, in 2011 had $59 million losses on about $245 million in revenues and the so-called “Freemium” model, based upon a massive advertising usage hardly meets musician’s needs too: these facts prove that in the long term there could be no Spotify anymore.

However, a considerable aspect in this discussion is the confirmation of an extensive cultural shift, which relates both to the music distribution process, the music consumption habits and the need for a different copyright policy to better protect intellectual property in the digital age, without causing additional losses for the music industries. Now, there is no doubt that file sharing, substantially weakened the protection of copyrighted works, reducing the industry profitabilityit, neverthless “is not [likewise] obvious whether a decline in profits would under-mine the incentives to create, market, and distribute artistic works. (Oberholzer‐Gee & Strumpf, 2010). As argued by the authors, in fact two interesting points must be considered. A direct consequence of the copyright weakness is the falling in the music price and the increasing willingness to pay for complements such as live events for instance. This would be a clear demonstration of a shift in music distribution and consumption behaviour at the same time, and in a certain way it would confirm the return to the reality of the last two centuries of popular music. Mick Jagger probably rightly noted that the era of making riches off of recording was really just a brief window in the history of music and the past was, and the future is going to be, much more about the performance. The second point to be considered relates to the fact that a decline in music industry profitability might not hurt music production because it has to do not only with money, but with musicians motivations too. This fact is confirmed by data: Nielson SoundScan estimates that 38,000 new albums were released in 2003, a figure that swelled to 106,000 by 2008. So, we are living in an era of unprecedent music abundance, where musicians can produce and distribute music with less technolgical barriers spreading a more extensive musical culture within a market where listeners will probably cover a more active role in searching the music they prefer.